Profit benchmarks established by the regulator for Ontario’s insurance industry caused drivers in the province to overpay for their insurance premiums by as much as $3 to $4 billion over a dozen-year span.
A study by the Schulich School of Business at the behest of the Ontario Trial Lawyers Association revealed that the 11 per cent ROE that Ontario’s Financial Services Commission established was exorbitant and an onerous burdern to Ontario consumers.
The authors of the study suggested reducing premium rates by capping the ROE at 5.8 per cent, in conjunction with other measures such as lowering the operating cost assumption. Using data from 2013, these measures could bring reductions in premium costs down by nearly 8 per cent. The present low rate of interest should allow the cap to hover around 5.5 per cent, concluded the study’s authors.
Trial lawyers in the province have called for an investigation by the auditor general into the auto insurance industry in Ontario. They have also requested that the government take steps to lower the profit cap.
Liberals promise to slash consumer’s car insurance rates on an average of 15 per cent. The Finance Minister’s spokeswoman announced rates dropped over 6 per cent in the last two years. According to his press secretary, they “look forward to reviewing the report.”
It’s never been a secret that the insurance industry in Canada is profit-driven with the goal of limiting payouts and low-balling settlement offers whenever possible. It can be quite difficult for the average Ontario resident to successfully negotiate with an insurance adjuster to get the highest value for one’s personal injury claim. Retaining an Ontario attorney familiar with the machinations of the insurance industry can be very helpful.
